An Indian tribute: Paul Samuelson, Guru

Last updated on: December 17, 2009 11:17 IST

Paul A Samuelson, one of the world's greatest economists, passed into the ages on Sunday, December 13. Janata Party President and economist Dr Subramanian Swamy, a student of Professor Samuelson, pays homage in this eloquent tribute, exclusive to rediff.com

If anyone can be called the father of modern analytical and scientific economics, it is Paul A Samuelson now sadly deceased at 94.

Anyone who has read economics, even if in the most fleeting way, cannot but recognise his most perceptive undergraduate economics textbook of all time, in its 19th edition now. When educated people think of analytical economics today, they think of Samuelson. Einstein in fact is the Samuelson of physics.

He was 92 when I last saw him, driving his car in Belmont, Massachusetts, his home area, a small elite suburb of Cambridge, the town of Harvard and MIT, as alert as ever.

He stopped upon seeing me on the sidewalk, pulled over and chatted with me about how I was. Since 2000 I have been going back every summer to Harvard to teach two courses in economics and I had been meeting him over a one-to-one lunch at his favourite restaurant in the Charles Hotel complex at Harvard Square. That year I had not yet called him and he was disapproving.

Whenever I met him, I was just his student, which I had been in 1962-1963 cross-registering at MIT which Harvard students could do. At every meeting with him I had to answer his rapid fire questions about a series of subjects, and even share delightful gossip. On that summer day on the Belmont sidewalk it was no different.

Later I became his colleague as co-author on the Theory of Index Numbers, published our research in the prestigious American Economic Review (1974) and the Royal Economic Society's Economic Journal (1984), but I was still treated as his student to be cared for, and questioned.

Samuelson's main contribution to modern economics was to use advanced calculus to show that economics could be structured on clearly stated on observable behaviourial assumptions or axioms, objectives, and then by mathematical deduction deriving economic laws that could be tested on real life statistical data.

He thus made economics a subject of scientific inquiry to be truly called a science in the sense that propositions in economics could be 'proved' with proofs just as theorems in mathematics were.

Mathematical logic and rigour was all, and little else mattered. Gone thus were the days of the 'Shakespearean' economics of Keynes and Galbraith's art of expression. Felicity in English no more mattered.

Mathematical methods took its place and thereby Samuelson globalised economics by enabling the little English knowing scholars such as the Japanese to join in international discourse and collaboration in research and teaching.

Economics thus exploded on the international scene and became fashionable.

Samuelson worked in two dimensions throughout his life. In one dimension, he spoke in homely English about the most complicated economic issues. He thus authored one of the most widely used college textbook in the history of American education.

The book, titled Economics, first published in 1948, was the globe's best-selling textbook for nearly 30 years. Translated into 20 languages, and updated periodically it sells over 50,000 copies a year a half century after it first appeared.

His second dimension was of mathematical rigour that began with his Harvard PhD thesis turned book titled The Foundations of Economic Analysis. This is a goldmine for future research even today. When he defended his thesis before a committee of three Harvard professors, which all PhD candidates have to do and pass, the story goes that the chairman of the committee Professor Schumpeter asked his two fellow members after the viva: 'Gentlemen, have we passed?'

Between these two books, Samuelson re-defined modern economics and made it a popular yet a science. For that he became the first American to win the then instituted Nobel Prize in 1970.

The textbook introduced generations of students to the ideas, in simple language of graphs, of John Maynard Keynes, the British economist who in the 1930s developed the theory that modern market economies could become trapped in depression, that a cut in wages would only mean a cut in demand and hence of profit, and thus the downward spiral would continue. And it would then need a strong push from government spending or tax cuts, in addition to lenient monetary policy, to restore the economy. Thus was born the concept of the 'stimulus'.

Laissez faire made way for modern competitive market economic system in which government had a role to play. In my view this neo-classical economics destroyed socialism as a theory forever. Never again to rest comfortably with the view that private markets could cure unemployment without need of government intervention in terms of stimulus, fiscal, and monetary policies. No need therefore for 'commanding heights' of government ownership.

That lesson has been reinforced in 2008, when the international economy slipped into the steepest downturn since the Great Depression when Keynesian economics was born. When the Depression began, governments stood pat or made matters worse by trying to urge wage cuts, to balance fiscal budgets, and erecting trade barriers.

But 80 years later, most industrialised countries took corrective action, raising government spending, cutting taxes, keeping exports and imports flowing and driving short-term interest rates to near zero. Samuelson made Keynes immortal and Depression containable.

Paul Antony Samuelson was born May 15, 1915 in Gary, Indiana, the son of Frank Samuelson, a pharmacist, and the former Ella Lipton. His family, he said, was 'made up of upwardly mobile Jewish immigrants from Poland'. His family later moved to Chicago. Young Paul attended Hyde Park High School in Chicago. After receiving his bachelor's degree from Chicago in 1935, he went to Harvard as a graduate student to do a PhD.

Among Samuelson's fellow students at Harvard was Marion Crawford. They married in 1938. Samuelson earned his master's degree from Harvard in 1936 and a PhD formally in 1941. He wrote his thesis in 1937. In 1940, Harvard offered him an instructorship (the Harvard equivalent of assistant professor which in turn equalled associate professor elsewhere), which he accepted, but a month later MIT invited him to become an assistant professor.

But jealousy and some suspect anti-Semitism of the late thirties made Harvard deny promotion to retain him even though he had by then developed an international following. Nobel Laureate Robert Solow, his former student and later colleague at MIT, jokingly said of the Harvard economics department of that time: 'You could be disqualified for a job if you were either smart or Jewish or Keynesian. So what chance did this smart, Jewish, Keynesian have?'

Marion Samuelson died in 1978. Samuelson is survived by his second wife, Risha Clay Samuelson and six children from his first marriage.

Fresh from India, and armed with a BA Honours in Mathematics and a Master's in Mathematical Statistics I first met Samuelson in his office in September 1962 wanting to be his student cross-registering in the most advanced mathematical economics course at MIT. I had arrived in Cambridge town on a Harvard scholarship for a PhD, thanks to the recommendation Dr Tarlok Singh of the Planning Commission which Harvard honoured.

Samuelson used to select every year only twenty students out of about 200 that applied, expecting to groom them as scholars. I wondered then whether I would be chosen.

But by then I was already a bit of a sensation in academia because as a MA student at the Indian Statistical Institute, Kolkata, I had published a research paper in the world's then most prestigious journal called Econometrica, demolishing using Integral Calculus, P C Mahalanobis's claim to fame called Fractile Graphical Analysis published earlier in the same journal. Mahalanobis, who was invited by the editor to rebut my criticism, had no answer.

In Samuelson's class as his student, once while he was lecturing on the theory of consumer behaviour, he wrote on the blackboard a series of equations to derive a theorem. From my desk I raised my hand and said, "You have one equation wrong, so you will not be able to prove the theorem." There was stunned silence in class. Samuelson then walked to where I was seated and glowered: "What did you say?"

I held my ground and offered to rectify what was a small careless mistake which all geniuses commit on the blackboard in class. He made me go to the blackboard and write out the correct equation which I did. Then sternly, he said: "See me after class." My classmates all thought that was the end of me; one even said to me, "Have you got your return ticket to India?"

Instead, it was the beginning of a relationship. When I saw him after class he said to my utter joy: "I think you and I should write a joint paper some day." This we did ten years later, but he helped me in the interim on a number of my papers published in my own name, and also thanked me in the footnotes of his published papers for correcting him or for giving him leads.

He and my thesis adviser at Harvard, Simon Kuznets, thus launched my career. I became a Teaching Fellow even as a student, then Instructor soon after, breezing through a PhD in the shortest possible time of 18 months, and Assistant Professor all at Harvard within three years of my arrival in Cambridge.

Amartya Sen invited me to join the Delhi School of Economics as a full Professor in early 1968 stating in a hand-written letter that my 'gaddi was being dusted.' I therefore spent three months in the summer of 1968 at the Delhi School of Economics as Visiting Professor, before returning to Harvard with the intention of winding up and joining as Professor of Economics at the Delhi School.

But I did not realise then that the Left triumvirate of Sen, K N Raj and S Chakravarty had in the three months discovered that I was not only not ideologically neutral or soft like Jagdish Bhagwati, but hard anti-Left and wanted to dismantle the Soviet planning system in India besides producing the atom bomb.

So when I arrived in India in late 1969 this triumvirate scuttled my ascending the dusted gaddi. Sen was at his hypocritical best in explaining to me his volte face.

Samuelson was enraged when heard this and perhaps felt empathy because of his own experience in the late thirties at Harvard, and urged me to return. When I returned to Harvard to teach in the summer of 1971, Samuelson told me, "Stay here and write a treatise on Index Numbers and you will be worthy of a prize." But I was in a fighting mood and told him I would return.

Fortunately there was a professorship open at IIT-Delhi. Dr Manmohan Singh was the chairman of the selection committee. Samuelson with Kuznets, the 1971 Nobel Laureate in economics, wrote the committee strong letters of recommendation. Armed with it, Dr Singh did not wilt under the huge pressure mounted by the triumvirate and I was appointed a Professor of Economics in October 1971. But it did not last long.

The triumvirate then persuaded Indira Gandhi that I was a closet member of the RSS with chauvinist views, and a danger to her. With the KGB favourite Nurul Hasan as education minister, I was easily sacked in December 1972, but re-instated by court in 1991.

I then joined politics since no academic avenues were now open. I continued to return to Harvard for the summer to teach, and got nothing but warmth and welcome from Samuelson each time.

During the Emergency, Henry Rosovsky, another famous Harvard economist, became dean and he appointed me visiting professor for the year 1976-77. Mrs Gandhi sent an emissary to him to cancel my appointment! But Henry was no pushover. He maintained that I was still an IIT professor till the courts in India pronounced on it.

By now Samuelson was convinced that I had responded to a higher call by going into Indian politics. He then encouraged me to fight on. He wrote a powerful column in Newsweek against the Emergency and even signed a petition of Nobel Laureates to the US president condemning the jailing without trial of 140,000 Indians. It was most unusual for him, but it encouraged me to fight on.

Although I did collaborate with him again on Index Numbers in the early eighties, Samuelson remained sympathetic from then on to my choice of a political career over academics. I met him often in the Faculty Club for lunch after I went back to Harvard for a year-and-a-half in 1985-1986 as visiting professor courtesy my friend and famous China scholar Roderick Macfarquhar.

In the 1990s after we ushered in reforms, Samuelson wrote me a letter expressing happiness that 'at last, India has discovered economic growth.'

Once at a get together I called him my guru and explained the gurukul system of our rishis. He said, "Ah! That is what the US needs.". But Paul Samuelson was already a rishi in the way he treated his chosen students and saw them through difficulties.

I shall remember that always as I was once Samuelson's chosen student among the many he nurtured in his glorious life.